Question

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,300 $ 0.07 Maintenance $ 0.25 Wages and salaries $ 4,000 $ 0.30 Depreciation $ 8,500 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.02 For example, electricity costs are $1,300 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,600 Revenue $ 59,050 Expenses: Cleaning supplies 6,450 Electricity 1,865 Maintenance 2,365 Wages and salaries 6,910 Depreciation 8,500 Rent 2,100 Administrative expenses 1,770 Total expense 29,960 Net operating income $ 29,090 Required: Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Answer:-1)-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8600 car washed*$6.70 per car washed	57620	59050	1430	Favourable
Less:-Expenses
Cleaning expenses	8600 car washed*$.70 per car washed	6020	6450	-430	Unfavourable
Electricity	(8600 car washed*$0.07 per car washed)+$1300	1902	1865	37	Favourable
Maintenance	8600 car washed*$0.25 per car washed	2150	2365	-215	Unfavourable
Wages & salaries	(8600 car washed*$0.30 per car washed)+$4000	6580	6910	-330	Unfavourable
Depreciation		8500	8500	0	None
Rent		1900	2100	-200	Unfavourable
Administrative expenses	(8600 car washed*$0.02 per car washed)+$1700	1872	1770	102	Favourable
Income from operations		28696	29090	394	Favourable

2)-

Lavage Rapide
Activity Variances
For the month ended August 31
Particulars		Planning Budget	Flexible Budget	Variances	Remark
		$	$	$
Revenue	8500 car washed*$6.70 per car washed	56950	57620	670	Favourable
Less:-Expenses
Cleaning expenses	8500 car washed*$.70 per car washed	5950	6020	-70	Unfavourable
Electricity	(8500 car washed*$0.07 per car washed)+$1300	1895	1902	-7	Unfavourable
Maintenance	8500 car washed*$0.25 per car washed	2125	2150	-25	Unfavourable
Wages & salaries	(8500 car washed*$0.30 per car washed)+$4000	6550	6580	-30	Unfavourable
Depreciation		8500	8500	0	None
Rent		1900	1900	0	None
Administrative expenses	(8500 car washed*$0.02 per car washed)+$1700	1870	1872	-2	Unfavourable
Income from operations		28160	28696	536	Favourable